Alliance Bankshares Corp (ABVA) SEC Filing 10-K Annual report for the fiscal year ending Saturday, December 31, 2011

NEWS RELEASE

Alliance Bankshares Reports 2011 Results

CHANTILLY, VA – Alliance Bankshares Corporation (NASDAQ – ABVA) today reported a net loss of $483 thousand for 2011, which includes a loss of $739 thousand during the 4^th quarter. Results during the quarter were unfavorably impacted by significant non-recurring merger expenses, OREO write-downs, and settlement of a legal action relating to the previous sale of a bank-owned residential property. Also, the continuing low level of long term interest rates resulted in an additional increase in the valuation of a $25 million FHLB Advance, which is accounted for under Fair Value Option (FVO) accounting. The quarterly results represent a loss of $.14 per share versus income of $.03 per share for the same period in 2010. For the full year ended December 31, 2011, the net loss is $.09 per share versus net income of $.14 per share for the full year ended December 31, 2010. Alliance’s regulatory capital ratios are strengthened since December 31, 2010, and remain above the levels necessary to be considered a “well capitalized” institution.

Core operating earnings (see Reconciliation of Non-GAAP Measures) on a pre-tax basis improved substantially year-over-year, up from $1.9 million in 2010 to $2.98 million for 2011. This calculation results from adjusting net income from continuing operations for non-recurring revenues and expenses, e.g., income from securities gains and expenses for merger-related activities and fair value adjustments.

At December 31, 2011, total assets amounted to $511.6 million, or a decline of $26.9 million when compared to the December 31, 2010 level of $538.5 million. As of December 31, 2011, total loans were $306.9 million, which is $25.4 million below the December 31, 2010 level of $332.3 million. The decline in the loan portfolio results from a combination of strategic repositioning of lending activities, normal amortization, and payoffs, the total of which offset new loan production during the period. Investment securities amounted to $123.5 million as of December 31, 2011, a decline of $12.4 million from the December 31, 2010 level of $135.9 million. Year-over-year, total deposits declined $26.6 million, to $380.4 million at December 31, 2011.

Non-performing assets (NPAs) at December 31, 2011 amounted to $17.97 million, an increase of $8.6 million when compared to $9.4 million at December 31, 2010. Year-over-year, the rise in NPAs is due to an $8.96 million increase in non-accrual loans, which offset a modest decline in OREO. At December 31, 2011, the allowance for loan losses stood at $5.4 million, or 1.76% of loans.

Continued efforts to manage expenses have resulted in a decline in noninterest expenses of $421,000 on a quarterly comparative basis, and $2.2 million year-over-year when comparing 2011 to 2010. The Bank’s net interest margin for 2011 was 3.48%, a decrease from 3.79% for 2010. The margin decline resulted largely from the change in mix within the investment portfolio and was also artificially depressed due to nonaccrual interest income reversals.